I am 22 years old how should i invest my 401 k?

My money at first was being invested in a low interest money market and now i have invested it into the s&p 500; however i feel that maybe i should split it up into different stocks bonds and mutual funds. Any suggestions?

Your asset allocation plan is the most important decision you will make in a long-term investment, such as that for retirement. Asset allocation is how you choose to split your money into the various asset classes out there. For example, what percentage of your overall portfolio will you devote to bonds verses stocks? How will you divide your stocks between domestic and foriegn markets? How much large-cap do you want compared to small-cap? These are questions you ask when you think about your asset allocation plan.

In chapter 23 of my free book ( http://www.invest-for-retirement.com ) I have summarized a few of the more common asset allocation "rules of thumb" that are supported in the literature. They basically support the idea of making your portfolio stock-heavy when you are young, and then gradually switching to more bonds as you get closer to your retirement date.

If you are overwhelmed by the decision process, then consider what the literature tells us: The single most important decision regarding your asset allocation is simply the stock to bond ratio. Long-term studies have shown, time and time again, that the stock to bond ratio determines the overwhelming majority of the risk and return of a portfolio over the period of many decades. All other asset allocation decisions are secondary to this. It is vitally important that you get this ratio set up to what is appropriate for you (and only you can decide this).

Read chapter 23 of my book. It will explain most of what you need to know. And if you don't like the book, then you lose nothing. It's free.

For a more detailed read on asset allocation, check out Richard Ferri's book called "All About Asset Allocation". That man knows his stuff.

BTW, index funds, such as an S&P 500 Index fund, are a great place to invest for retirement. Index funds usually keep your costs low, thus allowing you to keep more of what is rightfully yours. When it comes to costs, use these 3 basic criteria to help you weed out the bad funds:

- Use only No-load funds. Loads are a commission charged by a mutual fund company. Load funds are for suckers and serial killers. You're neither, so avoid load funds.

- Use funds that have no 12b-1 fees. 12b-1 fees are charged by slimy mutual fund companies who have nothing better to do than rob you of your future well-being. 12b-1 fees are a scam and DO NOT improve the earnings for the mutual fund shareholders.

- Use funds that have an expense ratio less than 1%.

At your age you can afford to be as aggressive as you want. The S&P is a good investment - its broad and somewhat diversified, and has a good track record of returns. Good choice!

Bonds are very safe, but at your age not neccessary. I wouldn't advise against bonds, but I wouldn't put more than 5-10% of my total 401k there.

I'm 34 and I am 100% in the stock market as far as retirement is concerned - S&P index funds, international index fund, and a few individual stocks. The only recommendation I'd make to you is to add an international fund (preferably index fund if your plan offers it). This will give you more diversification in case the US economy starts to slow down.

First off, max it out if possible. At the very least, contribute the % of your income that will maximize your employers contribution (no reason to not fully indulge in free money). Once you get the contributions going, you won't miss the money now and will be ever so appreciative when you have the millions of dollars awaiting you at retirement.

2nd, because you are so young, you want to be aggressive, but not insane, as you have time to ride out any storms. Your employer probably provided you literature to assist in your decisions. Invest heavily in growth funds, the rest in something more conservative.

Your idea to diversify is a wise one.

Doesn't your employer have someone who will discuss your portfolio with you? Their advice is usually good, although they *might* try to steer you to companies they represent somehow. I do recall some scandal about that a few years ago....

you can invest your mony in mutual fund for 7%-8% montly profit & if you want working 10% too.
iwant helping you
atharipour@yahoo.com

Since you have a large cap fund s&p500 index, I would add a mid cap, a small cap, international & lastly a good high quality bond fund.

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